Mobile financial patent wars brewing?

The rise of new technology always incubates a lot of patent litigation. We've seen it many times in the past. So should we be surprised by more patent-related suits when it comes to mobile financial applications? 

Consider MShift, which boasts an impressive array of more than 200 clients, including large banks, community banks and others. More than 70 percent of the 50 largest credit unions that offer mobile banking have partnered with MShift. So it has grounds to style itself "the standard by which mobile banking is measured." Recently, it launched a new mobile deposit solution. 

The Freemont, CA-based firm is active on the legal front as well. It has just sued Digital Insight, a unit of Intuit, and Community Trust Financial Corporation and Community Trust Bank in federal court. The suit argues that the defendants have violated its "881 Patent," called "System for Converting Wireless Communications for a Mobile Device," which was awarded in September 2005. The patent covers "communications between a mobile device and a network site," enabling mobile devices to access network sites by "means of a conversion and adaptation engine which facilitates communications." 

If you've been in this business a while, you know that the threat of a patent infringement suit always looms. 

The biggest companies basically stockpile patents and deploy them competitively. IBM, with its vast store of patents, was known for this. When the browser wars heated up initially, we saw some gaudy jury awards in several patent suits, though I'm not sure how much was ever actually paid out. Wall Street has proven fertile ground for these kinds of wars. 

So it's hard to evaluate these sorts of claims. It might strike you as akin to the browser wars of old, in that the "covered" terrain is very broad. Clearly, every mobile technology vendor will have to find a way to facilitate communication between devices and networks. It may be that similar solutions are developed independently. Then again, some actual infringement may be at work. It's really hard for lay people to know. So in some sense, we'll have to wait for a trial, though I doubt it'll get to that. 

The Supreme Court may weigh in on the practice of granting patent protection to abstract business innovations, but that would hardly put an end to the wars. So how to know if the patent wars are out of hand? If we ever see the rise of patent trolls--firms that exist for no other reason that to sue--you'll know we've hit that point. Hopefully, it won't happen. - Jim